What is Intellectual Property Escrow?

Specifically, it's when a neutral third party, such as InnovaSafe, holds mission critical intellectual property applications based on the terms and conditions of an agreement created by the licensor, the licensee and the neutral third party. The neutral third party is tasked with the implementation of the terms and conditions of the intellectual property escrow agreement ("IPEA"). Although used prior to 1988, the power of the IPEA was increased when President Reagan signed the Intellectual Property Bankruptcy Act ("IPBA"), commonly referred to as the DeConcini Bill, into law in 1988.

Why Use Intellectual Property Escrow?

Well, the following are some very good reasons that an intellectual property escrow agreement should be implemented:

• The licensee requires protection and assurance against the licensor's failure to maintain or support the application properly; and / or
• The licensee requires protection and assurance against the licensor's failure to maintain or support the application indefinitely; and / or
• The licensee requires protection and assurance against the licensor not being able to maintain or support the application for any number of reasons; and / or
• The licensor uses the agreement to support its market position by standing behind its product and it's client service.

When Should You Consider Using Intellectual Property Escrow?

It's best to implement an agreement in conjunction with the execution of the master license agreement ("MLA") and prior to deployment of the application, but this cannot always be accomplished. In cases where the IPEA cannot be executed along with the MLA then it's best to execute the IPEA as soon as possible.

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